Founded over three decades ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other cities. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) There has been so much going on these past couple of weeks that needs to go on the record, we’re producing a third This Week at Amtrak in less than a week. We have read about the sudden departure of Amtrak former Inspector General Fred Weiderhold, Jr. and the follow-up to that departure by Senator Chuck Grassley of Iowa. Also making a buzz in the past 10 days was the presentation of a report by the United States General Accountability Office entitled “High Speed Passenger Rail: Effectively Using Recovery Act Funds for High Speed Rail Projects.” Reading all the way through it could prove to be a snoozer for some, but this report by the GAO’s director of physical infrastructure issues raises some important points about the need for clarity and focus in government, particularly relating to the subject of passenger rail. That report is presented at the end of today’s TWA.

2) First, some good news from here in Florida. We’ve been following the saga of Tri-Rail, South Florida’s commuter rail system which operates in three counties, Palm Beach, Broward (Ft. Lauderdale), and Miami-Dade. (Note, if you’re like this writer and wondered how Dade County suddenly got to be Miami-Dade County in recent years, you are not alone. It seems the county fathers decided since Miami pretty much completely dominates Dade County, the county should officially be renamed Miami-Dade County. Which, if you’re a map printer, created some headaches for you. One interesting note: further north, in Central Florida is Seminole County, which is adjacent to Orange County the home of Orlando and partially to Walt Disney World. Originally, Seminole County was named Mosquito County, and the name was changed sometime prior to the Florida Land Boom. It would be tough to draw tourists to a location named Mosquito County.)

Tri-Rail has been publicly struggling with its upcoming annual budget since once again, no permanent funding source was declared for the commuter system by the gutless, do-nothing Florida legislature this year. Tri-Rail officials have been publicly wringing their hands, hoping for a government miracle to save having to slash all weekend and holiday service, and cut huge amounts out of daily service, effectively creating a revised system which would meet very few needs of its total ridership, and drive passengers away. Add to all of that the feds telling Tri-Rail if it didn’t run a full complement of service, the United States Government would demand all sorts of money be repaid in full for infrastructure improvements made (Double tracking the system, and more.) with signed contracts saying Tri-Rail would operate a certain size schedule, no matter what.

Suddenly, it was a miracle. Well, no, not really. What it was amounted to was transit officials accustomed to lots and lots of funding from other sources (Mainly, the county governments.) and never having to say you’re sorry for anything “finding” some money for operations.

So, what happened? Gosh, golly, gee, wow, it turns out the money for next year’s full operations was there all of the time, just sitting unused and unloved in another account. Yes, you guessed it, Tri-Rail bosses figured out money could be borrowed from accounts to improve parking and some other equipment upgrades to keep the system operating while a final solution is found for a permanent source of funding.

The transit-riding public, and all of the businesses in the Tri-Rail area which support the system with paid subsidies for employees and other programs read account after account in the news media saying Tri-Rail was in crisis. Yes, it was – a crisis of its own making. It would have been wonderful if the gutless, do-nothing Florida legislature had done something this year about solving the funding problem for Tri-Rail on a permanent basis. But, keeping true to form, they punted and said it was someone else’s problem.

What the various denizens of Florida’s legislative branch of government fail to recognize in a huge state such as Florida (Fourth in the nation for population.) is what brings prosperity to one corner of the state brings prosperity to all of the state. Transit is not a regional issue for Florida; it is a state issue. It’s a given in state government highways and other infrastructure will be built and maintained; why isn’t it a given commuter rail should be built and maintained, too, as long as it’s a viable system like Tri-Rail?

3) The plight of Tri-Rail is similar to the plight of Amtrak. There was a belief at Tri-Rail someone else would bail them out and keep the system running, while the real answer to the immediate problem was just sitting in a Tri-Rail bank account.

Much the same is true at Amtrak. As long as it’s business plan – a favorite of the fans of failure – continues to emphasize money from outside sources instead of first finding every possible way to generate revenues by full use of the company’s various assets, Amtrak will lurch from crisis to crisis.

Amtrak probably thinks the failed experiment of the heartstrings-pulling Heartland Flyer, funded by the State of Oklahoma for seven figures a year, is a good train. Harrumph. The Heartland Flyer is a waste of good Superliners and locomotives which could be producing far more revenue elsewhere, and could be replaced by a bus or two for the average of a total of 111 passengers per day the train hauls over its 206 mile, two-state route. Amtrak nationally only captures one tenth of one percent of domestic transportation output; the taxpayers of Oklahoma are taking a huge bath with the Heartland Flyer as on a statewide basis it falls far below Amtrak’s national average.

Rational people hope this more than decade-long operating junior train will one day grow into a real, productive, adult train if the consortium of states working together right now figures out a way to correctly stretch this route north of Oklahoma City and connect it with the route of the Southwest Chief in Kansas. When you consider the tiny consist of the Heartland Flyer still has only a 43% load factor, one has to wonder if anything at all is being done to bolster this train. While it does serve as a feeder to the Texas Eagle in Fort Worth, Texas, (And, the Eagle itself only has a 53% load factor, well below what it should be.) the Heartland Flyer is an example critics can point to and say, “Look at the millions of dollars Oklahoma has fed into this train, and the impact on the mobility of Oklahomans is near zero in the overall picture of state transportation output.” While a tiny, vocal, misinformed minority group of supporters of this train can boast and say Oklahoma has Amtrak service, the real question is, “at what price?”

Amtrak’s critics constantly point to the high cost of low return on many routes, and the Heartland Flyer is a prime example of when a real, gut-wrenching decision has to be made whether or not to provide a transportation alternative at an exorbitant price, or use those assets elsewhere. Having a train for the sole sake of having a train helps no one except those who like to stand by the side of the track and watch the train go by.

From the standpoint of Amtrak’s business plan, it doesn’t care where government money comes from, as long as it comes. The only states which have a viable train that can be pointed to by other states as a success story are North Carolina and the Carolinian, with a load factor of 77.9%, Pennsylvania’s Pennsylvanian with a load factor of 74.3%, and Michigan’s Pere marquette, with a load factor of 67.3% (But, as reported earlier this month in TWA, even the State of Michigan is looking cross-wise at continued funding for this train as ridership has slipped this fiscal year.). If North Carolina’s model can be followed, it would be easier for other states to justify the cost of state-funded passenger rail service.

While starter projects are important, the 11-year run of the Heartland Flyer has proven nothing more than a half of a blip on the transportation radar in Oklahoma, and realistic people have to seriously look at this train and how the assets to operate this train could create a better return on investment elsewhere. It’s notable North Carolina’s other state funded train, the Piedmont, with a load factor of 44.6%, operates solely with equipment owned and maintained by the State of North Carolina.

So, in summary, Tri-Rail found fiscal religion in its own bank account, and will live to fight another day for better state funding, perhaps in the form its has advocated for years, a small, local sales tax on rental cars only in the three tourist-laden counties Tri-Rail serves. Oklahoma has shelled out millions of dollars for a junior train (If there were any Rail Diesel Cars still available for intercity service, this train as it is today would be a good candidate for those.), and, unless a solution is found to extend the train to its logical endpoint further north in Kansas, will have to make some serious decisions about the worth of the Heartland Flyer.

Amtrak, as our national passenger rail provider, still lacking a long term vision, has got to make some decisions, too, before someone else makes them for it. Amtrak has to decide whether it is happy to drain money out of state bank accounts or develop its own plan for as much self-sufficiency as possible. As long as there are annual fights over money being paid to Amtrak to run these small routes, there will be anxiety and wonder every budget year. As one president of a state passenger rail association so eloquently said, “it’s not a matter of making 55% return at the farebox, it’s a matter of straining every muscle and ounce of energy and squeezing out every dime of assets to get to 56% that’s important.” Amtrak and its various fans of failure have been too happy for too long to never worry about reaching that extra point of self-reliant liberty.

4) Something fun from half-way around the world: Fox News reported in mid-June many Japanese women choose to commute in female-only passenger rail coaches during rush hour to avoid being groped by men, and now men are requesting men-only coaches for fear of being accused of groping.

You can’t make this stuff up. Ten representatives of male commuters petitioned the commuter train operator for men-only coaches, noting there have many cases of groping, as well as false charges of groping, so, since the female-only coaches have been successful, in the spirit of gender-equality, men-only coaches should also be available.

No word on whether married couples would be allowed to ride in the same car.

5) Here is the GAO report mentioned above.

[Begin quote]

Testimony Before the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, Committee on Commerce, Science and Transportation, U.S. Senate

HIGH SPEED PASSENGER RAIL
Effectively Using Recovery Act Funds for High Speed Rail Projects

Statement of Susan A. Fleming, Director Physical Infrastructure Issues

For Release on Delivery Expected at 2:30 p.m. EDT, Tuesday, June 23, 2009

Mr. Chairman, Ranking Member Thune, and Members of the Subcommittee:

I am pleased to be here today to discuss the implementation of high speed intercity passenger rail projects in the American Recovery and Reinvestment Act of 2009 (the Recovery Act). The $8 billion provided by the Recovery Act for high speed and other intercity passenger rail projects has focused more attention on and generated a great deal of anticipation about the possibility of developing high speed rail systems in the United States. These projects are seen by some as serving an important transportation role, by moving people quickly and safely, reducing highway and airport congestion, and being environmentally friendly. My statement today focuses on (1) the factors that we have identified that affect the economic viability of high speed rail projects and (2) how the Federal Railroad Administration’s (FRA) recent strategic plan incorporates those factors. 1 My testimony is based on our recent report on high speed rail, our review of FRA’s strategic plan, and discussions with FRA and selected transportation experts. 2

In summary, we found that while the potential benefits of high speed rail projects are many, these projects—both here and abroad—are costly, take years to develop and build, and require substantial up-front public investment, as well as potentially long-term operating subsidies. Determining which, if any, high speed rail projects may eventually be economically viable will rest on factors such as ridership potential, costs, and public benefits. FRA largely agrees with our March report. FRA’s strategic plan for high speed rail outlines, in very general terms, how the federal government may invest the $8 billion in Recovery Act funds for high speed rail development. However, this plan does not establish clear goals for the federal government in high speed rail—other than establishing a “longer term goal of developing a national high speed intercity passenger rail network of corridors”—and does not define a clear federal role for involvement in high speed rail projects other than providing Recovery Act funds. As such, in our view, it is more a vision than a strategic plan. As part of a discussion to prepare for this hearing, FRA told us that it sees its strategic plan as a first step and that it intends to seek structured input from stakeholders and the public to help develop strategies to implement its vision.

Factors That Affect the Economic Viability of High Speed Rail Projects

The factors affecting the economic viability of high speed rail projects include the level of expected ridership, costs, and public benefits (i.e., the benefits to non-riders and the nation as a whole from such things as reduced congestion), which depend on a project’s corridor and service characteristics. High speed rail is more likely to attract riders in densely and highly populated corridors, especially where there is congestion on existing transportation modes (such as highways or airports). Characteristics of the proposed service are also a key consideration because high speed rail is more likely to attract riders where it compares favorably to travel alternatives in terms of trip times, frequency of service, reliability, and safety. Costs largely hinge on the availability of rail right-of-way, and a corridor’s terrain. To stay within financial or other constraints, project sponsors typically make trade-offs between cost and service characteristics.

Once projects are deemed economically viable, project sponsors face the challenging tasks of securing the significant up-front investment for construction costs and of sustaining public and political support and stakeholder consensus. We found that in other countries (France, Japan, and Spain) with high speed intercity passenger rail systems, the central government generally funded the majority of the up-front costs of high speed rail lines. 3 The $8 billion in Recovery Act funds for high speed rail (and other intercity passenger rail) lines represents a significant increase in federal funds available to develop new or enhanced intercity passenger rail service. This amount, however, represents only a small fraction of the estimated costs for starting or enhancing service on the 11 federally authorized high speed rail corridors. For example, the San Francisco-Los Angeles portion of the California high speed rail corridor alone, which already has about $9 billion in state bonding authority, is estimated to cost about $33 billion dollars. 4 Furthermore, federal funds for high speed rail in the past (as with the Recovery Act) have been derived from general revenues, not trust funds or other dedicated funding sources. This makes ongoing capital support for high speed rail projects challenging, as they compete for funding with other national priorities such as health care, national defense, and support for ailing industries. In addition, the challenge of sustaining public-sector support and stakeholder consensus is compounded by long project lead times, the diverse interests of numerous stakeholders, and the absence of an established institutional framework for coordination and decision making.

FRA’s Strategic Plan Is a First Step

FRA’s strategic plan attempts to address the absence of an institutional framework for investments in high speed intercity passenger rail service. In our recent report and in 2005, 5 we discussed the need for:

1. Clear federal objectives and clear roles for all stakeholders (federal, regional, state, and local governments and freight, commuter, and passenger railroads).

2. Clear identification of outcomes expected.

3. Ensuring the reliability of ridership and other forecasts to determine the viability of high speed rail projects.

4. Including high speed rail with a reexamination of other federal surface transportation programs to clarify federal goals and roles, link funding to needs and performance, and reduce modal stovepipes that hinder financing transportation improvements that will lead to the greatest
improvements in mobility.

FRA’s plan, which the Recovery Act required the FRA to issue 60 days after the act was signed, outlines in very general terms how the FRA will allocate the Recovery Act high speed rail funds. It does not define goals for investing in high speed rail, how these investments will achieve them, how the federal government will determine which corridors it could invest in, or how high speed rail investments could be evaluated against possible alternative modes in those corridors. In our opinion—and as FRA recognizes—this strategic plan is a first step in planning federal involvement. FRA has emphasized that its approach is to involve the ultimate “owners” of high speed rail—the states and communities in which they will reside—to help flesh out the approach to developing high-speed rail that are under its control. FRA officials also told us that it plans to spend Recovery Act funds in ways that show success to help keep longterm political support for these projects at the local level.

Overall, FRA generally agrees with the issues that we raised in our March report, with the report’s recommendations, and with the observations that we are making today. Last week, FRA took its next step by issuing interim guidance for applying for Recovery Act funds. 6 The guidance lays out the evaluation criteria for grant funding, the weights to be applied to the criteria, and the selection criteria.

In conclusion, the infusion of up to $8 billion in Recovery Act funds is only a first step in developing potentially viable high speed passenger rail projects. The host of seemingly intractable issues that have hampered development of these projects remain as challenges, and these issues will need to be resolved to effectively spend Recovery Act funds. Surmounting these challenges will require federal, state, and other stakeholder leadership to champion the development of economically viable high speed corridors and the political will to carry them out. It will also require clear, specific policies and delineations of expected outcomes, and objective, realistic analysis of ridership, costs, and other factors to determine the viability of projects and their transportation impact.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you or other Members of the Subcommittee may have.

1 By economically viable, we mean that a project’s total social benefits offset or justify the project’s total social costs.

2 See GAO, High Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role, GAO-09-317 (Washington D.C.: Mar. 19, 2009); and Federal Railroad Administration, Vision for High- Speed Rail in America (Washington D.C.: April 2009). We conducted this performance audit from May 2009 to June 2009 in accordance with generally accepted government auditing standards. These standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

3 GAO-09-317.

4 The corridor would extend from Sacramento and San Francisco through Los Angeles to San Diego.

5 GAO-09-317 and GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP (Washington D.C.: February 2005).

Please contact Susan Fleming at (202) 512-2834 or Flemings@gao.gov about this statement. Contact points for our Offices of Congressional Relations and Public Relations can be found on the last page of this statement. Greg Hanna and James Ratzenberger made key contributions to this statement.

[End quote]

Volume 6, Number 19

Founded over three decades ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other cities. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) Things are getting interesting regarding the sudden departure by retirement of Amtrak’s well-respected Inspector General, Fred Weiderhold.

No one seems to know where this is going, but, fortunately for Amtrak and the American taxpayers, Senator Chuck Grassley of Iowa has taken a strong interest in this situation.

It’s important to note throughout Amtrak’s decades-long corporate life, Amtrak has often been remiss in following normal rules and procedures and courtesies (Not to mention settled law.) in Washington.

Back in the late 1980s, this was the identical case with VIA Rail Canada, run by our cousins in the cold north. Since the Canadian federal government is a parliamentary system of government, things can happen more quickly and dramatically there versus what happens in the United States. The bottom line for VIA at the end of the 1980s was the government of Prime Minister Brian Mulroney felts it was constantly being submarined by the board of directors and management of VIA, and, in a meeting of just a handful of members of the Prime Minister’s cabinet, suddenly, half of VIA Rail Canada disappeared due to a tremendous slash in VIA’s government funding.

That one cut cost the original Canadian on Canadian Pacific Railway lines to be gone, and the lesser route of the Super Continental on Canadian National Railroad lines to become the premier train of the system (With the “Canadian” moniker.), but to this day only operating a tepid tri-weekly service between Toronto, Ontario and Vancouver, British Columbia via Edmonton and Jasper, Alberta. Also soon gone was the Atlantic, which operated between Montreal, Quebec and Halifax, Nova Scotia via St. John, New Brunswick.

The tourist service VIA Rail Rocky Mountaineer survived, but was transferred to private ownership where it has flourished and grown by being freed of the oppression of government ownership.

Several other routes, such as service to Sudbury, Ontario, also disappeared.

Amtrak for decades has played – like VIA Rail Canada – fast and loose with federal law, mostly often obeying federal statutes and mandates when convenient and otherwise doing as it pleased, often ignoring propriety.

Understand, it really didn’t matter who was on the Amtrak Board of Directors at the time or who was running the White House at the time, these games have continued unabated for decades.

Perhaps, a century from now, when a true and deep history of Amtrak is compiled and written by a neutral historian, there will be an understanding of why so many directors of Amtrak chose to either look the other way or did what they did for the sake of expediency.

Maybe, some of what was done was done to get around the vagaries of attempting to run a business in a cesspool like Washington.

But, for whatever reasons things have happened in the past, it looks like a day is dawning when business as usual at Amtrak may have to be radically changed. We saw the many great efforts of departed Chairman of the Board David Laney to put Amtrak on a more transparent and businesslike track. We saw a reduced board after his departure struggle to get through the wrong hiring of Alex Kummant and his subsequent merciful departure. And, we now see a continuing reduced board with buckets of free federal money and lots of extraneous infrastructure projects going on, but without a clear vision of what Amtrak will be later this year or next year.

Here’s hoping Senator Grassley will continue to work to bring the light what is really going on at Amtrak.

Amtrak Interim President and CEO Joseph Boardman, a creature of government and not accustomed to working within or for private sector boundaries needs to take the lead with Senator Grassley and reveal what his management team is doing to solve any problems being identified as holding Amtrak back from greatness.

2) This is a press release, published in full, from Senator Grassley’s office. Keep in mind this is a press release from a politician, not a news story.

[Begin quote]

For Immediate Release

June 25, 2009

Grassley asks Amtrak to respond to report describing interference with IG work

WASHINGTON — Senator Chuck Grassley has asked Amtrak about the circumstances of the Inspector General’s unexpected retirement seven days ago and invited Amtrak to provide  information about the interference by Amtrak in the work of the Inspector General described in a report prepared at the request of the retired watchdog.

Grassley said the report indicates that Amtrak’s policies and procedures have systematically violated the letter and spirit of the Inspector General Act.

“As I continue my investigation into whether the independence of the Inspector General was undermined by Amtrak officials, I want to make sure I have any and all information Amtrak wants to provide,” Grassley said. “The allegations are serious, including third parties being told to first send documents under subpoena by the Inspector General to Amtrak for review, and the Inspector General being chastised for communicating directly with congressional appropriations and authorizing committees,”

Grassley asked the Office of the Inspector General last week for a copy of the report, which was prepared by the law firm of Willkie Farr & Gallagher. Grassley said his office had been in communication with former Inspector General Fred Weiderhold about the issues before Weiderhold’s retirement on June 18, 2009.

Also this month, Grassley has been investigating the President’s decision to fire the AmeriCorps Inspector General, after the Inspector General issued two reports of mismanagement and abusive spending by AmeriCorps grantees. Grassley also has asked the International Trade Commission to account for its termination of its Inspector General who had been repeatedly hired for six-month increments and been given outstanding performance reviews. In both cases, Grassley said the administration failed to comply with a law enacted last year requiring Congress to be notified 30 days in advance of the dismissal of an Inspector General and given the reasons for the firing. Then-Senator Barack Obama co-sponsored the legislation along with Grassley.

“Inspectors general are watchdogs over the federal bureaucracy, and the Inspector General Reform Act of 2008 is supposed to better safeguard their independence so they can do their jobs for taxpayers and program stakeholders,” Grassley said. “The President has said he wants more accountable government, and keeping good watchdogs on the job is fundamental to that goal.  Inspectors general need to be strengthened, not undermined.”

Last week, Grassley asked the Treasury Secretary to put an end to documented resistance from the Treasury Department to requests for information from the Special Inspector General for the Troubled Assets Relief Program. Senator Grassley was an advocate for creating a Special IG for TARP to try to hold the program accountable and co-sponsored legislation to strengthen the ability of the Special IG to conduct oversight after the TARP program changed its original mission. Earlier this year, Senator Grassley also battled the White House after it tried to subject requests of the Special IG to the red tape of the Paperwork Reduction Act. Grassley subsequently introduced legislation to exempt the Special IG from the Paperwork Reduction Act.

Grassley has long worked to empower inspectors general to conduct effective oversight of the federal bureaucracy and he has held inspectors general themselves accountable for meeting the requirements of the jobs.

The text of Grassley’s letter to Amtrak is below, along with his letter of last week to the Amtrak Office of the Inspector General, which sought a copy of the report. The attachment to today’s letter, including the “Report on Matters Impairing the Effectiveness and Independence of the Office of Inspector General,” are posted here.

June 25, 2009

The Honorable Thomas C. Carper

Chairman of the Board

Amtrak

National Railroad Passenger Corporation

10 G Street, NE

Washington, DC 20525

The Honorable Lorraine A. Green

Interim Inspector General

Amtrak

Office of Inspector General

National Railroad Passenger Corporation

10 G Street, NE

Washington, DC 20525

Dear Chairman Carper and Interim Inspector General Green:

Thank you for your response dated June 23, 2009. My staff is currently in the process of reviewing information from various sources concerning the Amtrak Office of Inspector General (OIG). I am interested in the facts regarding former Inspector General Fred Weiderhold’s (IG) retirement. Interestingly, he retired on the same date that the law firm of Willkie Farr & Gallagher, LLP completed a “Report on Matters Impairing the Effectiveness and Independence of the Office of Inspector General” (”Report”). I understand that there was a meeting with Mr. Weiderhold and the Board of Directors on that same date as well, and that his decision to retire was made during that meeting. Accordingly, please:

1)      provide a description of the circumstances surrounding former IG Weiderhold’s unexpected retirement, specifically the relationship between the timing of his retirement and the Report;

2)      produce any and all internal as well as personal materials relating to: (a) the former IG’s departure; and (b) the Report; and

3)      produce any and all materials cited in footnote 7 of the Report.

For definitions related to this request and all future requests, please refer to Attachment 1.

The Report prepared by Willkie Farr & Gallagher, LLP and Attachment 2 suggests a long-term and unrelenting interference with the activities and operation of the OIG. The Report seems to indicate that Amtrak’s policies and procedures have systematically violated the letter and the spirit of the Inspector General Act, as amended. However, in order to ensure that Amtrak has an opportunity to respond, please identify any factual representations with which you disagree, or about which you wish to provide additional information. Please be sure to provide documentation in support of your position(s).

I also want to thank you both for offering to “maintain an open line of communication” with my office, and look forward to my staff receiving a briefing from you. In addition, I would appreciate your making the following individuals immediately available for interviews:

1)      D. Hamilton Peterson, Deputy Counsel to the Inspector General;

2)      Edward Puccerella, Director of Congressional & External Affairs;

3)      Colin C. Carriere, Counsel to the Inspector General; and

4)      E. Bret Coulson, Deputy Inspector General.

It was also reported to my staff that some OIG staff members may be fearful of retaliation if they were to discuss the matters set forth in this letter with anyone, including Congress. As you may be aware, 18 U.S.C. § 1505 prohibits obstruction of Congressional inquiries. Denying or interfering with employees’ rights to furnish information to Congress in any way will be considered an obstruction of our inquiry. Amtrak and Amtrak OIG employees should be free from fear of retaliation or reprisal, and authorized to freely answer questions from Congress without representatives from Amtrak present, if they so desire. Accordingly, I would appreciate your advising the OIG and all full-time, part-time and contractor employees at Amtrak of the fact that they are free to contact Congress without advising Amtrak management or their respective supervisors.

Thank you again for your continued cooperation and assistance in this matter. As you know, in cooperating with the Committee’s review, no documents, records, data or information related to these matters shall be destroyed, modified, removed or otherwise made inaccessible to the Committee.

Sincerely,

Charles E. Grassley

Ranking Member

Attachment

June 18, 2009

E. Bret Coulson

Deputy Inspector General Management & Policy

Office of Inspector General

Amtrak

National Railroad Passenger Corporation

10 G Street, NE

Washington, DC 20525

Dear Mr. Coulson:

As a senior member of the United States Senate and as the Ranking Member of the Senate Committee on Finance (Committee), it is my duty under the Constitution to ensure that Inspectors General, which were created by Congress, are permitted to operate without political pressure or interference from their respective agencies. Inspectors General were designed for the express purpose of combating waste, fraud, and abuse and to be independent watchdogs ensuring that federal agencies were held accountable for their actions. I understand that Inspector General Fred Weiderhold, Jr. has retired today.

Based on contacts that my staff had with Mr. Weiderhold on two recent occasions (April 2, 2009 and June 4, 2009), I understand that the OIG has suffered from repeated and continuous interference from the agency. After the most recent discussion, it was agreed that the OIG would provide, among other things, a White Paper and specific examples of agency interference with OIG audits and/or investigations. To date, the OIG has not yet provided any documents. As you know, any interference such as that was described in these previous discussions is a direct violation of the Inspector General Act of 1978.

In light of Mr. Weiderhold’s unexpected retirement, please provide the previously requested documentation immediately. I am deeply troubled that these aforementioned meetings with my staff and discussions of the OIG’s independence concerns predicated this personnel action with IG Weiderhold. Furthermore, I am even more concerned that there is a lack of accountability, based on the OIG’s reported lack of independence, for the $1.3 billion in stimulus funds that Amtrak has received from American taxpayers.

Due to these recent events, I specifically request all materials at the IG’s office be preserved immediately.

In addition to providing the requested documentation, please provide an immediate briefing to my staff on the level of proper oversight the OIG has over of the $1.3 billion dollars of American taxpayer money, and what role the previously discussed independence issues with the agency played in the elimination of former IG Weiderhold.

Thank you in advance for your assistance and I would appreciate a response to this inquiry by June 19, 2009.

Sincerely,

Charles E. Grassley

Ranking Member of the

Committee on Finance

cc: The Honorable Thomas C. Carper

Chairman

Amtrak

National Railroad Passenger Corporation

Joseph H. Boardman

President and Chief Executive Officer

Amtrak

National Railroad Passenger Corporation

[End quote]

Founded over three decades ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other cities. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) Here at home in an adjoining county to the south is St. Augustine, which bills itself as the Ancient City. St. Augustine, Florida has been around as a point of civilization since 1565, and was pretty much a sleepy, colonial town, even after Florida statehood in 1845. It wasn’t until the notorious Henry Flagler, business partner of John D. Rockefeller (Some historians say Flagler was the smarter of the two ruthless business partners.) came vacationing in Northeast Florida in the 1878 that he noticed sleepy St. Augustine.

Mr. Flagler came to Jacksonville for the temperate climate. (A century ago, oranges were still a cash crop in Northeast Florida.) He crossed the might St. Johns River (The only major river in North America which flows north.) and traveled by passenger train to St. Augustine in 1883. There, he found a slumbering city of Spanish descent which afforded cooling ocean breezes, a pleasant bayfront view, and a rural county seat.

Mr. Flagler took a liking to St. Augustine, and starting building hotels and the Florida East Coast Railway. His first hotel, the Ponce de Leon – begun in 1885 and which today is the home of Flagler College – became an overnight success as a playground for the Gilded Age rich and famous. More hotels followed, with Mr. Flagler becoming St. Augustine’s most prominent part-time denizen.

Not content to stop at St. Augustine, Mr. Flagler pushed his new railroad and string of hotels and resorts southward, creating such famous Florida hot spots as Ormond Beach/Daytona Beach, Cocoa Beach, Melbourne, Stuart, Palm Beach (Where Mr. Flagler eventually built his permanent home and today’s world famous The Breakers hotel and resort, the only remaining asset of the original Flagler System.), Ft. Lauderdale, and, in partnership with Julia Tuttle and her family, Miami and Miami Beach. Mr. Flagler’s railroad entrepreneurship didn’t end in Miami; he gazed further southward and saw Key West, the southernmost point of the United States, and promptly in 1905 began building the Florida Overseas Railroad, one island at a time from South Florida to Key West, completing the huge project in 1912.

Depending on your favorite Florida historian, there is debate as to whether or not Henry Flagler or Henry B. Plant, who owned a freight shipping company and small railroads, and in 1879 combined his holdings into the Plant System (Later, the Atlantic Coast Line Railroad.), building to the west coast of Florida via Orlando, invented modern Florida by the strength of their iron horses.

Of course, it was the common use of residential air conditioning in the late 1950s which created the most modern version of Florida, and allowed inland cities and towns away from cooling ocean and Gulf of Mexico breezes to grow and prosper. The coming of the Space Age at Cape Canaveral on the Florida East Coast Railway really put Florida on the international map.

But, no matter who your preferred railroad robber baron was prior to the Florida Land Boom of the 1920s, it was the railroad which created Florida, and especially St. Augustine.

St. Augustine was the home of a violent and deadly railroad strike in 1963; FEC non-operating employees went out on strike over several issues. The FEC continued to run trains with management personnel, but the strike turned violent with numerous bombings of bridges and trains, resulting in deaths, permanent injuries, and general mayhem.

By the time of the strike, Florida was served by the Seaboard Air Line Railroad, the Atlantic Coast Line, the FEC, and, into the northeast corner of Florida, the Southern Railway.

While the Seaboard’s Silver Meteor, Silver Star, Palmland, Sunland, and a host of local trains traveled down the middle of the state on SAL’s mainline through Ocala, the Coast Line trains, the East Coast Champion, the Everglades, and the trains it operated in conjunction with the FEC, such as the famed Winter-only Florida Special, the Havana Special, and the trains from the Midwest, including the Royal Palm, Dixieland, South Wind, Seminole, and City of Miami all stormed through St. Augustine on their way to and from Miami.

The 1963 strike ended all of that. The FEC’s named trains simply disappeared, annulled because of the strike and the continuing violence and threats of violence. The trains handled by the Coast Line moved inland westward, from the FEC to soon-to-be merger partner’s SAL lines down the middle of the state.

By court order, train service briefly returned to the FEC from 1965 to 1968, with a lone locomotive and two trailing cars – offering coach seating and parlor car seating, but no food service – running up and down from North Miami to Jacksonville’s union terminal. (The main FEC station in downtown Miami had been torn down by 1965 as part of urban renewal in downtown Miami.)

Even FEC retirees who chose to come to Jacksonville from Miami when traveling by train, went via the Seaboard or Coast Line because it was safer, had more frequency offerings, and full train service.

In the late 1990s, in the George Warrington era of Amtrak, there was a brief flurry of activity in St. Augustine because discussions and negotiations were underway to return passenger train service to the FEC, courtesy of Amtrak and a ton of money (Now allocated elsewhere.) from the State of Florida.

Plans were laid, station sites were identified (The FEC, like so many other railroads which exited the passenger business had executives at the time who wanted to make sure those pesky passengers stayed away, so all but one or two FEC passengers stations were either demolished, sold, or had their tracks ripped up.), and cities and towns along the east coast competed to see whether or not they could snag one of the limited number of station stops planned for the new service.

St. Augustine, once the railroad king of Florida and still the corporate home of the FEC until 2008, decided to build a new station on the FEC main line directly across the street from St. Augustine’s general aviation airport, claiming it was creating an “intermodal” center of transportation. No one ever quite explained what the attraction would be for private pilots to fly into the St. Augustine airport, tie their planes down, and then board a passenger train, but that was the plan.

All of those plans came to a screeching halt when Mr. Warrington’s Acela bubble burst, and the Northeast Corridor Service which was supposed to save the entire company ended up having the company coming close to being liquidated.

Now, in the third century of trains through St. Augustine, once again there is talk of passenger trains calling at St. Augustine. Several local government groups along the FEC are petitioning popular Florida Governor Charlie Crist to apply for free federal monies to pay for restoring service between Jacksonville and Miami via St. Augustine, Daytona Beach, Cocoa Beach, Melbourne, Fort Pierce, Jupiter, and into West Palm Beach where a new connection would be built for the trains to join the former SAL main line (Now Tri-Rail commuter line and present Amtrak line.) to take the train into Amtrak’s Miami/Hialeah southern terminal.

The scary part of this is the news media is reporting these funds are being asked for to use for high speed rail, not conventional rail. While the FEC is a very good piece of railroad with excellent infrastructure, no one would ever confuse it with high speed rail. Some of the logic goes the incremental approach should be taken, first restoring service, and then eventually upgrading the service to high speed over a specified period of time.

What is interesting about this is the current ownership of the FEC, RailAmerica, Inc., which in turn is owned by Fortress Investment Group. RailAmerica, in addition to owning the FEC, owns nearly four dozen other short line and regional railroads in the U.S. and Canada.

RailAmerica is a solid company, with good financial performance. Fortress Investment Group is a giant fund which controls many companies, all on a private basis. This means there are no individual stockholders or Wall Street money managers demanding RailAmerica do this or that to shore up stock prices, and no public reporting of financial results. In other words, the managers are free to carry out any prudent business decisions they see fit (Within the framework of the law and overall regulations.), including striking a deal with Amtrak to run trains on their property.

If it makes money and doesn’t interfere with RailAmerica’s other mission of supplying outstanding freight service, then there is an interest.

If the State of Florida does strike a deal for stimulus money for this route, there isn’t much standing in the way of restored passenger service between Jacksonville and Miami via the FEC, with the exception of creating a new equipment pool.

Initial plans were to move the Silver Meteor from Orlando to the FEC, which is a very, very bad idea. Why would anyone want to take service away from one of the world’s busiest vacation destinations in Central Florida to serve the towns of Florida’s east coast?

A better solution is to find additional equipment, or, perhaps split a train in Jacksonville (Which Amtrak did from its very beginning until the horror of the common consist in the 1990s, and the closing of the Tampa crew and maintenance bases.), with half of the train traveling via Orlando and half of the train traveling via St. Augustine. Other options are to extend other trains from the Midwest or Northeast south to Miami via the FEC, such as the Capitol Limited or City of New Orleans via Mobile, Alabama. Extending an existing Superliner train would require less equipment than starting a complete new route.

As usual, it’s all going to come down to politics. Which state (Other than Illinois.) has the most juice in Washington? Which state has the best planning? Which state can move the quickest?

St. Augustine may or may not have train service again, 125 years after Henry Flagler became serious about hauling passengers into Florida to fill up his elegant hotels and resorts. If it does, yet another of the dozens and dozens of gaps in America’s passenger rail system will be rightly filled.

2) Inquiring minds want to know: With all of the money being thrown around Washington, and every city, town, village, hamlet, and their dog making plans to snap up as much money as possible to expand everything from local trolley systems (A good idea.) to major commuter rail systems to sprucing up stations, where are Amtrak’s plans for the future? What about fleet expansion, Rail Passenger Association of California President Paul Dyson wants to know? The single-level sleeping car order for the east coast trains doesn’t do anything to expand capacity; it just keeps enough new equipment floating into a maintenance-weary fleet to delay total breakdown.

What about new routes? We know three restart routes are being studied (The Sunset Limited east of New Orleans, the Pioneer, and the North Coast Limited/Hiawatha.), but, what about bold, new plans to fill in so many of the other gaps in the country outside of the Northeast Corridor?

And, the easiest thing of all, what about all of the other dozens and dozens of pieces of equipment sitting around in the weeds on wreck line tracks, waiting to be re-loved and repaired? When will Amtrak ask for money to fix this stuff, too?

A dose of reality for True Believers is Amtrak is lagging behind everyone else in vision, if not outright bold management. Yes, Amtrak Interim President and CEO Joseph Boardman seems to be nudging things in the right direction – only marginally and slightly so – but, when is he or the Board of Directors going to give things a major shove in the right direction?

Wise gray head Gil Carmichael has called for at least 150 new trainsets to ready Amtrak for his brilliant Interstate II strategy. While to some that may seem a big number, it’s only a starting point.

Remember, Amtrak today has considerably less than 2,000 cars on its total roster, including active cars and cars sitting in the weeds on the wreck line. In the mid 1960s, just before the invention of Amtrak, there were over 5,000 passenger cars in the combined national fleet of America’s passenger carriers, and that was a depleted number from the halcyon post-World War II days of rebuilding the worn out war time fleet of cars.

Now is not the time for timidity and reliance on the graciousness of others for survival. Now is the time for bold plans, bold action, and an understanding of how easy it is to bring America’s passenger rail system from an asterisk on the charts of transportation output to a real figure representing growth and prosperity.

3) While we’re on the subject of history, News From 1930 blog on the Internet came up with this fascinating gem, reporting what was written in The Wall Street Journal from June 16th through the 21st in 1930:

[Begin quote]

Pullman Company [Operator of the nation’s sleeping car business over the majority of passenger railroads.] purchases in the last year: 1,165,000 towels, 444,000 pillow slips, 387,000 sheets, 63,000 porter’s jackets, 5,786,000 paper bags for women’s hats. Launders 278 million items annually.

[End quote]

That’s a lot of items, especially for the first year of the Great Depression. At one point early in the 20th Century, it was said the Pullman Company made up more beds every night than the largest hotel chain in the country.

4) Now, what? Amtrak’s highly respected Inspector General, Fred E. Weiderhold, Jr. suddenly retired from Amtrak after 35 years, including being the watchdog who kept the contractors honest when the NEC was electrified north of New Haven, Connecticut.

This happened practically overnight, and was unexpected by most. The Boston Globe wondered in its news columns what brought on this sudden urge to retire, but no one is talking. It should be noted in the same several day period Mr. Weiderhold retired, at least three other government IGs were forced out of their jobs by the Obama Administration without reasonable explanation.

[Begin quote]

National Railroad Passenger Corporation
60 Massachusetts Avenue NE
Washington, DC 20002
www.amtrak.com

FOR IMMEDIATE RELEASE

ATK-09-047

Contact: Media Relations (202) 906-3860
June 18, 2009

Amtrak Inspector General to Retire

Fred E. Weiderhold, Jr. Served Amtrak for 35 Years

WASHINGTON – Amtrak Inspector General Fred E. Weiderhold, Jr. today informed the Chairman of the Amtrak Board of Directors that he is retiring after 35 years of loyal service to the railroad.

“As Amtrak’s first and only Inspector General, Fred has made important contributions in helping the Board of Directors understand key issues facing the railroad and made useful recommendations to improve how we do business,” Amtrak Chairman Thomas Carper stated. “We thank him for his dedicated service to Amtrak and wish him well in his retirement.”

Carper added that under the federal Inspector General Act, the Amtrak Inspector General is appointed by the Chairman of the Board of Directors. Carper said he takes this responsibility seriously and will soon undertake a search for a replacement that can continue to maintain the integrity, independence and objectivity required of the position.

In addition, Carper said that he has confidence in the Inspector General staff and expects them to carry on their important work during this interim period, including providing effective oversight of how Amtrak is handling the stimulus funds it received from the American Recovery and Reinvestment Act.

Mr. Weiderhold has been the only person to serve as the Amtrak Inspector General since former Amtrak Chairman W. Graham Claytor, Jr, asked him to establish the Amtrak Office of Inspector General (OIG) in 1989. Previously, he was Amtrak’s first Special Assistant to the Chairman for Employee Relations, conducting special investigations and acting as the company’s first employee ombudsman. He has been one of the longer serving Inspectors General within the OIG community.

About Amtrak

Amtrak has posted six consecutive years of growth in ridership and revenue, carrying more than 28.7 million passengers in the last fiscal year. Amtrak provides intercity passenger rail service to more than 500 destinations in 46 states on a 21,000-mile route system. For schedules, fares and information, passengers may call 800-USA-RAIL or visit Amtrak.com.

[End quote]

5) The Holland, Michigan Sentinel on Monday, June 22, 2009 reported ridership on Amtrak’s Pere Marquette is down 12.7% this May compared to a year ago, and a state senate committee which funds the service is looking to slash funding for the train.

Only 8,500 people boarded the route in May of 2009, or an average of 137 passengers per departure. All of the usual reasons were given for low ridership, including low gas prices and the slowed economy.

Here’s the problem no one seems to want to understand: As long as government funding as the primary source of revenue for these short, perpetually money-losing routes is necessary, politicians are going to always be looking for ways to cut budgets, and low return on investment programs are usually the first to go.

Too much of Amtrak relies on this very type of funding. There are unceasing stories from New England about those states wanting to cut funding for local trains (This, of course, does not include Amtrak Interim President and CEO Joseph Boardman’s home State of New York where he previously served as head of the state department of transportation. New York only funds one Amtrak train, the Adirondack, even though the entire Empire Service trains, with only an average load factor of 35%, gets a free ride with an all-federal subsidy.). Oklahoma pays big bucks for the tiny Heartland Flyer with even worse transportation output performance.

What will it take to make Amtrak and its True Believers understand a healthy and robust long distance system throws off enough excess cash (profits) these short distance trains can be mostly internally subsidized? Why perpetually fight these annual political battles when the simple answer is vision and expansion, even if it’s just making the existing skeletal long distance system train consists longer?

Why is this such a difficult concept to understand? Why do so many ill-informed people think it’s perpetually okay to support failure when success is within easy grasp?

6) Here’s some heartburn for those who believe the passenger business can never be profitable: Carnival plc, which owns Carnival Cruise Lines, Princess Cruises, Holland America Line, Cunard Line, and The Yachts of Seabourn in North America; Costa Cruises in Europe; P&O Cruises, Cunard Line, and Ocean Village in the Untied Kingdom; AIDA Cruises in Germany; Ibero Cruises in Spain and Brazil; and P&O Cruises Australia in Australia and New Zealand, operates 88 cruise ships with a passenger capacity of approximately 169,040 souls. Carnival also marketed and operated 16 hotels or lodges with approximately 3,500 guest rooms; approximately 560 motor coaches used for sightseeing and charters, 24 domes rail cars, which run on the Alaska Railroad between Anchorage and Fairbanks, Whittier and Denali, and Whittier and Talkeetna; 2 luxury dayboats; and sightseeing packages.

Carnival plc, headquartered in London, when tracing its heritage back through P&O Princess Cruises, was founded in 1850. Television fans may remember the real Princess Cruises happily loaned its ship, the real Pacific Princess, to Aaron Spelling and ABC to create the wildly popular television hit, The Love Boat, which spurred the modern cruise line renaissance.

All of this, by the way, is somehow accomplished without any government subsidies and is effected through private capital and entrepreneurship.

7) William Lindley of Scottsdale, Arizona has some thoughts on state passenger rail organizations. Mr. Lindley, a longtime professional associate of URPA, is a past president and treasurer of the Arizona Rail Passenger Association, and currently serves as a writer and editor for the group’s newsletter.

[Begin quote]

What does a rail passenger association really need to do? A recent report illustrates how what looks like failure to uphold principles may have helped doom a major city’s plans for modern passenger train service.

In Atlanta, Georgia, a proposed green space called the “Decatur Beltline” would remove track connections which permitted trains to connect in all directions from Atlanta’s downtown yards and stations. According to the National Association of Railroad Passengers Newsletter of May 2009, this “pitted local environmentalists against passenger train advocates (Georgia ARP remained officially neutral to minimize bad blood among erstwhile allies.)”

Say, what? Since when would a responsible passenger advocacy group roll over and play dead when the future of any kind of sensible passenger train operations is threatened? When I saw that I had to do some digging.

According to a November 30, 2005 Associated Press report, Ed McMahon of the Urban Land Institute called for using Atlanta’s “unused” railway tracks for a linked system of parks, paths and transit. Now, while this is certainly an admirable goal, according to AP, “A panel of transportation experts raised concerns when it found isolated parts of the loop would not have riders to support trains, trolleys or whatever transit options are proposed.” In other words, here we go again with removing a vital railway link – which can’t be relocated – in favor of some green space which can be placed anywhere.

This conflicts with the goals of a long-proposed and eagerly anticipated downtown intermodal terminal at approximately the site of the original Atlanta Union Station, and with an immediate connection to mass transit MARTA’s hub, the Five Points subway station, from which trains radiate north, south, east, and west.

Atlanta’s other former main station, Terminal Station, on the Southern Railway, had south-facing stub-end platforms and was on Southern’s mainline just west of Union Station. Although the Richard B. Russell Federal Building replaced Terminal Station in the 1970s, a single through-track connection to the Union Station area still exists … but neither Terminal Station nor the current Peachtree station used by Amtrak can reasonably be expanded for the demands of an expanded modern passenger operation.

The Five Points site is within walking distance to Georgia State University buildings, the popular Underground Atlanta shopping and nightlife district, and the downtown sports arenas. Furthermore, there is potential at a downtown terminal for a building with visual and interpretive ties to Atlanta’s historic train stations and its growth as the key city to the “New South” – building on the idea of the station as gateway to the city.

The City of Atlanta, according to an Atlanta Journal-Constitution newspaper article of March 5, 2009, said that the State Department of Transportation’s “vision of high-speed rail would discourage future residential development.” Amazingly, the city seems thereby to value a few new apartments over connecting the entire metro area with its downtown transit center.

With the Georgia DOT’s March 2009 removal of its objection to the park project, trains will only be able to reach downtown via the west side connection. Amtrak’s Crescent and commuter trains from the north and east would have a two-mile backup move to reach a new downtown station.

Now, without the eastern loop connection, Amtrak would likely have to stop at a new station with a MARTA connection – a new stop miles further northeast from downtown than even the existing Peachtree Station. This would mean requiring longer trips for most users, and a
change of subway trains for many. This site, like Peachtree, has little potential for filling the perceptual role of a Gateway.

So, now, let’s return to that quote again:

“… pitted local environmentalists against passenger train advocates (Georgia ARP remained officially neutral to minimize bad blood among erstwhile allies.)” – NARP Newsletter, May 2009.

I wasn’t privy to the discussions but this certainly sounds like a failure to uphold the principles which should govern a passenger rail association. Rail passenger associations are neither historic preservation groups (the National Railway Historical Society fulfills that goal) nor are they railfan groups. Our associations are not yes-men to Amtrak, the railroads, local transit operators, real estate interests, sports teams, or environmental groups.

Indeed, the whole point of such a rail passenger association, as a non-profit institution, is a fiduciary (meaning: a relationship of confidence and trust) and a moral obligation to guide the progress toward modern and expanded passenger rail service. This is a charitable goal because passenger trains improve our quality of life, offer transportation options to everyone, improve our economy, and improve our environment … everyone wins with better public transit.

So was Georgia ARP’s failure to object to the removal of a vital transportation link a breach of trust for the objective of advocacy? Again, I wasn’t there so I can’t say, but if NARP’s account is correct, placing “not upsetting so-called environmentalists” above “fulfilling the confidence placed in your organization to preserve and enhance passenger train service” seems
highly suspect.

Because detailed coverage has proven difficult to find in newspapers or on-line, I dearly hope one of our Gentle Readers more familiar with the subject can soothe my fears.

[End quote]

Six months from today is Christmas Day!

1) Are you a fan of failure? You may be, if you believe the following things to be true:

• The reasons freight railroads exited the passenger business in 1971 are the same reasons anyone but Amtrak should not be in the passenger rail business today.
• Railroads in 2009 are just like the railroads of the middle of the 20^th Century and later until deregulation in 1980.
• There is no hope rail passenger service in North America can every make money under any circumstances.
• You believe everything you see and hear from many of your state or national rail fan organizations concerning Amtrak, and you refuse to do any independent thinking on your own.

2) Look at each of the four issues above, and think clearly about things in the first decade of the 21^st Century.

Joe Boardman, Interim President and CEO of Amtrak is telegraphing to the world he doesn’t want to be the head of a company which embraces failure. While there are still miles and miles to go, and there still is an overall lack of vision, there are some isolated signs Amtrak is slowly shaking off its constant culture of failure and has stopped saying no to anything because it’s more convenient to do nothing versus working to make money for the company.

And, some state membership organizations, like RailPAC in California, are not happy to be part of a culture of failure, and are demanding in no uncertain terms things be improved at Amtrak.

As said in this space countless times before, when railroads cheerfully exited the passenger business and left it all to Amtrak, things in the world of railroading were far different from today. Railroading on every level was still highly regulated by the government, and railroads were fighting for their corporate lives. State and local governments were taxing railroads practically out of existence, with every two streaks of rust being treated as mainline track and therefore being levied in the highest categories.

When the idea of Amtrak was first floated during the early days of the Nixon Administration, it was embraced as a way of helping the railroads – many of which had already slipped into bankruptcy or were on the very brink of bankruptcy – be relieved of a part of their business which was either running in the red or was not making back the cost of capital required to keep the passenger rail system operating with modern equipment and suitable station infrastructure. At the time of Amtrak’s beginning, there was no clue the relief of the Staggers Rail Act of 1980 would ever be considered by Congress.

In the late 1960s, the vast majority of locomotive and rolling stock was nearing the end of its supposed useful life, and would cost hundreds of millions of dollars to replace.

Much of the station and terminal infrastructure in place all over the country consisted of huge buildings built as monuments to the gilded age of railroading and corporate egos. The smaller, more practical stations were okay, but most were built prior to either of the world wars, and needed help to be made modern.

The best and the brightest of the Nixon Administration thought by combining most passenger service into one, non-competing company with a single management structure and all of the alleged savings of said structure would turn around the onslaught of the Boeing 707 jetliners and the Eisenhower Interstate Highway system populated by the latest offerings of Detroit zipping along in air conditioned comfort with power steering and power brakes and enjoying the hospitality of that new, upstart chain of moderately priced roadside hotels, Holiday Inn.

Passenger trains, after all, had no glamour, had no glory, were often old and creaky, and were considered passe, if you were being kind about the whole thing.

Actually, what hurt the passenger business the most was the strangulation of oppressive government regulation, where a struggling railroad couldn’t even get rid of a now-useless branch line milk train without spending thousands of dollars bucking the Interstate Commerce Commission and begging and pleading to be relieved of the burden of an expensive, non-necessary, non-revenue generating train.

The sad part is, many good railroaders intentionally sabotaged their once-glorious passenger trains to run off passengers so they could cook the financial books and be rid of what they thought of as the nuisance and vast expense of passengers.

By the Kennedy Administration in 1961, America had already become a too litigious society, with the beginnings of exorbitant jury awards to plaintiffs for the least problem or inconvenience, and railroads – particularly passenger railroads – were in the gun sights of prowling, money-grubbing plaintiff attorneys.

If you were a president of a near-bankrupt, struggling railroad, trying to do everything you could in the face of stiff competition from trucks which were practically unregulated compared to your operation, and trying to keep Wall Street happy so your stock price didn’t go through the floor and your ability to sell bonds didn’t evaporate, wouldn’t you look at your passenger operations and say to yourself, “why not give this business to anyone else to wants it, as long as I don’t have to fund it, anymore?”

And, so, they did.

And, the railroad industry struggle for survival continued for a couple of more decades.

In the process, far too much of what was then considered surplus and duplicate main line track was ripped up to keep the tax man poor. Business was at best staying steady, if not shrinking in alarming amounts, so why pay to maintain too much track?

That, of course, is the biggest regret of the era of creating mega-railroads and merger mania. Infrastructure we need today is gone, and if the environmental left has its way, will probably never come back, no matter how much our economy will suffer because of lack of adequate trackage. Just because some infrastructure was “rail banked,” that doesn’t mean it’s now available for reuse by the railroads. Incredibly, even where there was once a railroad, to put a railroad back you have to go through the lunacy and outrageous costs in time and money of worthless environmental impact statements so the latest poster animal or plant or creature for the tree huggers can be “saved” in place of necessity for mankind.

The Staggers Rail Act of 1980, signed into law by Jimmy Carter before he left office the next year, got rid of the worst of government regulation of the railroads. It allowed the railroads to act more like businesses than regulated public utilities, and most will agree it’s what saved the freight railroad industry from following Amtrak into the horrors and nightmares of public ownership (See: General Motors and Chrysler for modern applications of this type of fiasco.).

By the time Congressman Harley O. Staggers, Democrat of West Virginia, could get this extraordinary piece of legislation signed into law, there were also other changes in the transportation industry under the Carter Administration, including the deregulation of the airline industry in 1978, and the Motor Carrier Act of 1980. Both the abolishment of the Civil Aeronautics Board and the freeing of the trucking industry, along with the Staggers railroad legislation helped move the country into an era of prosperity under the Reagan Administration, and a welcome realignment of the transportation industry.

Perhaps during all of this the most comical instance was when the Nixon Administration – with a completely straight face – told the world the American passenger train would again reach prosperity within three years of the creation of Amtrak and an initial free federal monies infusion of $140 million from the public treasury. Little did the Nixonites know of the power of the road to ruin by an industry feeding from the federal trough and not having the responsibility of proving to a professional board of directors or shareholders the company is either solvent or on the road to being solvent.

All of this brings us to today, where the sons and daughters of the railroaders of the 1960s and 70s are now, complete with their MBAs, running the few remaining mega-railroads and short lines. Gone are the railroaders who made the tough decisions to rip up track and shrink available mileage. Gone are the railroaders who initially looked at trucks hurtling down new, four lane Interstate highways and sniffed and said, “nothing can replace the power of the train.”

Today’s railroaders are no longer in the ultimate struggle for survival, but are captains of a mature industry which is both discovering its roots, and overall rediscovering itself and its many capabilities as an essential – and permanent part – of American surface transportation.

Here’s a laugh every railroader can have: There is no other type of commercial transportation that has vehicles made – be it ships, space ships, jet and rotary engine aircraft, pipelines, and even trucks – which do not have much of the components for those vehicles shipped to the final assembly point by rail. Rail is the only carrier capable of routinely hauling just about anything, from booster rockets to ship propellers to airplane fuselages to truck transmission parts.

The difficult, messy decisions of 20^th Century history for railroads went away thanks to Congressman Staggers and President Carter. Today’s railroads, while still subject to the same rules of economic cycles as every other industry, are overall in a healthy position, and all of the support industry, such as car and locomotive builders are overall healthy, too.

Which means, the first thought in the morning for railroad presidents, CEOs, CFOs, and chairmen is not whether or not something is going to happen today to put the company into bankruptcy, but, how to swipe a nice chunk of business from a competing railroad or a trucking company, along with how to make the company more efficient.

Which also means, railroaders today, while having some limits to their patience, are more than willing to sit down and discuss passenger rail with serious people.

It has often been Amtrak through the years, not the host freight railroads, which has been hesitant to talk about system expansion. While many railroaders have moaned and groaned about their systems bursting at the seams for capacity prior to the recent recession, somehow, when someone really wanted to do something and the price was right, one more train could always be squeezed into the system.

Amtrak, using any excuse from the dog ate its homework to “no operating money” to “no equipment,” has historically embraced a culture of failure. For years, independent studies conducted by United Rail Passenger Alliance and others have shown Amtrak’s long distance trains to be profitable “above the rail.” What this means is the actual operating cost of the train, to get it from terminal to terminal, including all costs of running the train, have been cash-positive, or, to use that supposedly nasty “P” word amongst Amtrak’s alleged friends – profitable.

Today, Amtrak itself says the Auto Train makes 121% of the its operating costs, but it doesn’t use the “profit” word, probably because it was intentionally struck from the Amtrak corporate lexicon decades ago.

The Palmetto, according to Amtrak’s byzantine accounting system, makes nearly 100% of its operating costs through the sale of tickets and onboard services.

Most of the other daily long distance trains do as well, but to slightly different degrees. So, what is holding these trains back, through Amtrak’s accounting system, from bursting through the ceiling to complete profitability?

The burden on of excessive corporate overhead, a bloated reservations system which runs up costs quicker than a drunken sailor, and the intentional throwing off of costs directly and solely associated with the Northeast Corridor onto the national system of long distance trains so the NEC can claim to be operating in the black. (Keep in mind Amtrak’s other favorite accounting hocus pocus, the incorrect charging of NEC operations costs to capital costs, to disguise the real costs of owning and operating the NEC.)

If Amtrak keeps on its current path of promoting irresponsible short distance and corridor trains over cash cow long distance trains, it will forever be a ward of the government treasury and a failure.

Look at New York’s Empire Corridor, formerly the domain of current Amtrak Interim President and CEO Joe Boardman when he headed the New York State DOT before taking on the Amtrak assignment.

Mr. Boardman’s trains, totaling 18 departures a day (nine roundtrips), solely serve residents of New York State. These trains offer coach and business class service, and some trains have cafe/food service, too. Most of the departures are clustered around morning and evening rush hour in and out of New York City, and cover much of the same stations as Metro North commuter trains. For FY 2008, Empire Service trains had an average failing load factor of 35%, carried just 105 passengers per mile, and had an average length of trip of 124 miles per passenger. Empire Service trains carried 994,300 passengers, each paying an average of 33 cents per revenue passenger mile for total revenue of $41,058,400.

This is relatively wonderful if you are a resident of New York State and want to commute to work everyday in style. However, if you live anywhere else in the country, you have to be wondering why you have one train (or less) a day, while the New Yorkers along the Hudson River have nine roundtrips a day, plus many also have Metro North passenger train commuter service, and New York contributes zero dollars to this operation.

Yes, Mr. Boardman’s former home and employer get a free ride, 365 days a year, while just to the south the Commonwealth of Pennsylvania pays heavily for its Keystone Service (New York does help pay for the Adirondack route of one train a day), and Vermont, Virginia (starting this year), North Carolina, Michigan, Illinois, Missouri, Wisconsin, Oklahoma, Oregon, Washington State, and California all pay for their short distance regional and corridor trains.

Mr. Boardman, are you going to correct this grievous and unfair situation? Why should New York get a free ride while all other states have to pay?

This is the type of failure mode Amtrak has been in for too long. It’s irresponsible on one hand, and wants public treasuries in several states to make up for that by paying for what others are getting for free. If the Empire Service trains had a better load factor, then there would be room for debate about the credibility of keeping these trains running. But, since we’re looking at a whopping 35% load factor, one can’t help but wonder how much longer this is going to continue?

The saviors of Amtrak are the long distance trains. Amtrak in the past few years did a bang-up job, along with the unhelpful assistance of its various Amen Corner organizations, of selling a bill of goods to the government and public that long distance trains are evil, and short distance and regional trains are good.

The people doing this – from Amtrak managers to state and national rail fan organizations – did nothing short of defrauding the public with such nonsense and junk science.

Since there has been no legitimate scrutiny of Amtrak by outside sources beyond URPA, and the respected Amtrak Reform Council, Amtrak has been allowed to remain in a state of failure with no accountability and scrutiny. When some members of Congress or White House Office of Management and Budget officials have demanded Amtrak be held accountable, they have been either roundly shouted down, ridiculed, or ignored in favor of continued bad behavior by Amtrak for all of the wrong reasons.

So, what are you going to do about it?

The railroads of today are not the failed or near-failed railroads of 40 years ago. There is enough empirical evidence to show long distance trains are not only the wave of the future, but have the financial clout to liberate Amtrak from constant government interference and financial guardianship.

There are legitimate reports and corporate information available to anyone who can read from the Internet there are profitable passenger train services in Japan, Germany, the Netherlands, and elsewhere. If passenger trains can be profitable there, why not here?

The only people thinking and saying Amtrak must remain a failure are those who either don’t want to work cleverly or hard enough to make it a success, or those who have a vested interest in keeping things the way they are so they can retain what power they have (at other people’s expense).

So, what are you going to do about it?

Are you going to continue to accept whatever drivel Amtrak hands out to the public and politicians for unquestioned consumption, or are you going to ask questions? Are you going to demand your congressional representative and senators stop blindly accepting whatever Amtrak says, and ask Amtrak to do more?

Are you going to demand the White House, so enamored with passenger trains, makes sure whatever money is spent is done so in the most judicious manner?

Are you going to join the several activist state organizations around the country no longer accepting Amtrak’s the dog ate its homework excuses and say “do better!”?

Are you going to stop apologizing for Amtrak, claiming it just can’t do better because of the very lame excuse of “no money” and realize whatever Amtrak has done with the $30 billion it has received in free federal monies during its corporate life, have not been the right choices that have benefitted the greatest number of Americans?

Are you going to realize you, as an American citizen, have the same right to ask your government to provide you with passenger rail (as the only current provider of passenger rail in the country) as do people living in the Northeast Corridor who presume the blessings of passenger rail are a “given” and their passenger rail needs are more important than your passenger rail needs?

It’s really up to you to choose what to believe, and choose how to believe. You can believe passenger rail will always be a failing proposition, or you can choose to believe passenger rail can stand on its own and be part of a growing proposition that is market driven and a positive part of our capitalist system.

3) A number of times in the past this space has featured the writing of Ken Orski of Innovation News Briefs writing about transportation and infrastructure issues. Here is Mr. Orski’s latest issue of his publication, Volume 20, Number 8, dated June 11, 2009. For more information visit the web site www.innobriefs.com .

This issue contains a good roundup of developments in surface transportation policy, among other issues.

June 11, 2009

The Surface Transportation Bill – Closing the Gap Between Rhetoric and Reality

As the debate over the surface transportation program revs up and as Chairman James Oberstar prepares to release his thoughts on the “principles” of the proposed authorization bill, efforts to influence the legislative process are multiplying. The American Association of State Highway and Transportation Officials led with its new, well-documented “Bottom Line Report” that estimates future needs for highway improvements at $132-166 billion annually. The American Road and Transportation Builders Association, one of the most seasoned and influential advocates for transportation on Capitol Hill, has chosen to focus its efforts on promoting a proposal to establish “Critical Commerce Corridors” and to increase capital investment in transportation infrastructure through public-private partnerships.

Ad hoc coalitions also are weighing in. The “Building America’s Future” coalition led by Governors Ed Rendel and Arnold Schwarzenegger and Mayor Michael Bloomberg has issued a new appeal to Congress and the Obama Administration to make “transformative changes” and chart a new transportation vision for the 21^st century. The liberal-leaning “Transportation for America” (T4 America) coalition has published a report, The Route to Reform, calling for “a bold new vision” for a 21^st century transportation system and a restructured federal surface transportation program with specific goals. The Freight Stakeholders Coalition, a 17-member organization that includes public and private freight carriers, has released a 10-point platform calling for development of a comprehensive national freight program and a “National Multimodal Freight Strategic Plan.” A cryptically named “Combined Infrastructure Working Group” has drafted a set of policy recommendations focused on expanding the opportunities for private investment in U.S. infrastructure (the Group has not revealed the identity of its sponsors).

The latest to be heard from is the Bipartisan Policy Center’s National Transportation Policy Project (NTPP). Before a large gathering of Beltway insiders on June 9, the Project sponsors unveiled their report entitled Performance Driven: A New Vision for U.S. Transportation Policy. (The Project co-chairs include former Detroit Mayor Dennis Archer (D), former Senator Slade Gordon (R-WA) and former Congressmen Martin Sabo (D-MN) and Sherwood Boehlert (R-NY)) The report recommends “bold and comprehensive reform founded on a relatively simple proposition: U.S. transportation policy needs to be more performance-driven, more directly linked to a set of clearly articulated goals, and more accountable for results.” The sweeping proposal also recommends consolidation of all current transportation programs into two categories: formula-based system preservation programs (75% of all funds) and discretionary capacity expansion programs (25% of all funds). The latter would award grants for new infrastructure on a competitive basis. (the full report and executive summary are available at http://www.bpcntpp.org )

In the meantime, a group of private sponsors, including former Vermont Governor Howard Dean, former Indianapolis Mayor Stephen Goldsmith, and the law firm McKenna Long & Aldridge, have joined forces to launch a Council of Project Finance Advisors (CPFA). The aim of this initiative is “to provide recommendations and advocate for a center of excellence on public-private partnerships” modeled after similar organizations in Canada’s British Columbia and the United Kingdom. The CPFA, in the words of its prospectus, will assist the public and private sectors by providing greater transparency and credibility for public-private partnerships, serving as a repository of best practices on financing options, improving public trust in the P3 process and addressing public sector concerns.

A New Policy Consensus

Despite their diverse backgrounds, the various stakeholder groups have reached a remarkable measure of agreement-at least at the rhetorical level – about the future nature and direction of the federal transportation program. Every constituency agrees that the existing program has lost direction and lacks a clear sense of purpose. A composite version of the stakeholders’ conclusions and recommendations would read something like this (phrases in quotation marks are verbatim quotes from their reports):

Simply reauthorizing the existing program is not a solution. Rather, there is a need to “bring new approaches and fresh thinking.” The new bill must articulate “a compelling new vision” and the nation’s transportation policy and program must be fundamentally “reformed,” “restructured,” “reinvented” or “transformed.” (Indeed, calling for “transformative change” has become the mantra of many of the policy statements). Individual program categories must be reduced in number, consolidated and refocused to reflect more closely the national objectives. The future program must be “performance-driven,” and “outcome-oriented.” State and local transportation agencies must be held accountable for demonstrable progress toward achieving clearly defined goals. Tolling, private capital and public-private partnerships should be among the potential sources of revenue “but are not a silver bullet.” The project review and approval process must be streamlined with a goal of getting projects completed in far less time than is the case today. Congress must elevate freight transportation as a new national priority and establish a national freight program, perhaps with its own dedicated source of funding.

On funding, the concensus conclusions would read as follows: The fuel tax will remain the principal source of revenue for the federal surface transportation program for many years to come but the tax revenue currently collected is not sufficient to maintain existing infrastructure, let alone provide the funds needed to expand and modernize the transportation system. Increased vehicle fuel economy standards and a possible leveling of future travel demand is likely to lead to steadily declining receipts from fuel taxes. Moreover, the gas tax provides weak and somewhat inaccurate price signals and needs to be supplemented, and eventually replaced, with a more “sustainable” revenue mechanism that relies on direct user charges. In other words, the days of the fuel tax are numbered – but not just yet.

Closing the Gap Between Rhetoric and Reality

Assuming, as we do, that these statements reflect accurately the collective mindset of the transportation community, the challenge for the congressional leadership and the Administration will be to translate the lofty rhetoric and generalities into an implementable program. However, not all the rhetoric lends itself to implementation. For example, the NTTP report speaks of a “performance-driven” program and recommends eight “performance metrics” by which to evaluate the progress towards achieving the national goals (these goals include economic growth, national connectivity, metropolitan accessibility, safety, energy security and environmental protection). At a panel discussion celebrating the release of the NTPP report, skepticism about the feasibility of implementing such a complex performance-based system was much in evidence. “I am a seasoned enough observer to know that such an approach will not be adopted,” remarked one panelist. “Measuring performance and assessing outcomes requires a robust national data base and data collection capability that we simply do not possess,” another participant who follows the federal highway program closely told us.

The recommendations of the Transportation for America (T4 America) coalition suffer from a similar excess of rhetoric. Its Blueprint: The Route to Reform report recommends a series of performance targets that include reducing per capita vehicle-miles traveled by 16 percent, and tripling walking, biking and public transportation usage by 2030. However, the report is silent on how these targets are to be achieved- if, indeed, they are achievable. Similarly, the T4 America report talks about the need to create a mode-neutral “unified transportation trust fund” that would allow for greater integration of surface transportation systems and for cross-subsidization between the modes. However, the authors fail to consider the realities of congressional committee jurisdictions and modal self-interests, both of which have proved to be serious obstacles to integrating the surface transportation program along mode-neutral lines. What is more, as the Reason Foundation’s Bob Poole points out in his latest newsletter (June 2009), opening the fuel tax-funded pot of money to all forms of transportation would be the coup de grace for the user-pays/user-benefits principle advocated by the National Transportation Infrastructure Financing Commission and endorsed by scores of transportation professionals in and out of government.

Funding Remains the Big Unresolved Issue

Nowhere is the gap between rhetoric and reality wider than on the question of future funding. The American Society of Civil Engineers (ASCE) estimates that $2.2 trillion is needed over a five-year period to repair the nation’s aging infrastructure. AASHTO recommends an annual investment of $166 billion for highways and bridges and $46 billion for public transportation to improve system conditions and performance. Rep. James Oberstar speaks bravely about the need to double the current federal transportation program to $450 billion over the next six years. But the reality is less obliging.

The Obama Administration in its Fiscal Year 2010 budget has proposed to continue most transportation programs at a one percent baseline increase. It has noted that this proposal is subject to an upward revision as provided for in the upcoming surface transportation authorization. However, Congress has given no indication where any such additional money might come from. What we do know is that the Administration is categorically opposed to any immediate gas tax increase (”we are not going to propose any kind of an increase in the gas tax while our economy is in a state of recession and so many people are at work,” Secretary LaHood testified). Secretary LaHood also would “absolutely not” consider a transfer of general fund money into the Highway Trust Fund – thus closing the door on two of the most obvious and straightforward solutions to the funding shortfall. Instead, the Secretary has vaguely suggested that extra funds could be raised through a National Infrastructure Bank and private investors. However, so far the Administration has not spelled out its ideas on how to attract private capital and implement a meaningful program of public-private partnerships.

In the meantime, concern about the near-term solvency of the Highway Trust Fund tends to overshadow the issue of long-term infrastructure funding. The Highway Trust Fund will need $5 to $7 billion just to maintain current spending rates through the end of FY 2009 according to U.S. DOT and OMB officials. An additional $8 to $10 billion would be necessary to ensure the solvency of the Highway Trust Fund through the end of FY 2010 in the event the reauthorization schedule slips and Congress is obliged to pass an extension of the current law. (passing the bill by September 30 of this year would be truly “a triumph of hope over experience,” former Sen. Slade Gorton observed at the June 9 NTPP press conference).

A House Ways and Means subcommittee on Select Revenue Measures is expected to hold a hearing in late June or early July on alternative approaches to fund the multi-year surface transportation program. Until Congress has settled on a specific long-term funding strategy, until Rep. James Oberstar has unveiled his legislative proposal, and until the interface between the transportation bill and the energy and climate bill (H.R. 2454) has been clarified, the shape of the future federal transportation program will remain shrouded in uncertainty.

4) Keeping up with things on the South Florida Tri-Rail front as it battles for its existence in a political world that doesn’t know the difference between a subway and a commuter train: The South Florida Business Journal, a weekly business newspaper with a daily Internet news service which conducts unofficial polls came up with a fascinating tidbit of information.

The Business Journal asked its online readers – mostly executives and wannabe executives – the question, “How important is continued funding for Tri-Rail?”

The poll response was illuminating. Among all of the responses – again, mostly from people who probably don’t use the service, but know their employees do – 72% said Tri-Rail needs full funding, 8% said service cutbacks are acceptable, and 21% said they didn’t care about Tri-Rail or disapprove of it altogether.

That 72% is a pretty big, whopping number in favor of spending tax dollars on an alternate form of transportation. What do the taxpayers and voters of Palm Beach, Broward, and Miami-Dade counties in South Florida know that their elected representatives of both major parties don’t know?

1. For those of us who keep track of segments of the news using key words for Internet searches, the term “Amtrak” has been popping up on a frequent basis in stories referring to the bankruptcy and government restructuring of General Motors. Most of the time, Amtrak is being cited as an example of what happens when formerly private industry suddenly comes under public ownership, with all of the resulting ills and pains in that process. Most writers and thinkers are bemoaning the fate of GM, and hoping against hope GM will not one day be a close cousin to Amtrak as we know it today with all of the associated problems.

   Optimists, however, don’t point to Amtrak as a comparison for GM and Chrysler, but rather point to Conrail, the product of a similar crisis takeover that was allowed to work under market forces and eventually go back into the private sector and eventually become so attractive, it was fought over by two titans of modern railroading, CSX and Norfolk Southern.

   One can only wish GM and Chrysler the fate of Conrail, and not that of Amtrak.

2. Another fun exercise with the news has been the tracking of Vice President Joe Biden’s and United Stated Secretary of Transportation Ray LaHood’s ongoing dog and pony shows around the country exploring the future of high speed rail.

   There have been nearly identical headlines in almost every newspaper and media outlet around the country, wherever the Veep and Secretary have gone: “(Insert city name here) is likely on the fast track to high speed rail.”

   Since there is only $8 billion to go around to get things started, it looks like there are going to be a lot of disappointed folks who were hoping and dreaming to be in the first wave of high speed rail free federal monies. After all, $8 billion isn’t that much money when you’re looking at an entire continent, but it’s a start.

3. Speaking of high speed rail, this word has come from Gil Carmichael. As always, whatever Mr. Carmichael has to say is important.
   

   PRESS RELEASE

   For Immediate Release

   ITI’s Gil Carmichael says “ethical” 21st century High-speed rail transportation system 2.0 is needed now

   - Ambitious High-speed Freight and Passenger Rail-based Transportation Infrastructure Program Required -

   DENVER, CO, June 3, 2009 – Gil Carmichael, Founding Chairman of the Board of Directors of the Intermodal Transportation Institute (ITI) at the University of Denver, told a group of transportation industry, academics, and government leaders at the National Transportation Infrastructure & Regulatory Policy Forum, held at the University of Denver, in Denver, Colorado, that an “ethical” high-speed rail-based intermodal transportation system must be implemented – and soon.

   “Like President Obama, a growing number of American people have a vision of a high-speed rail, intercity passenger transportation infrastructure system in the U.S.,” said Carmichael. “It is a logical and necessary next step forward from President Eisenhower’s Interstate Highway System of the 1950s; but proponents have long had a hard time being heard until recently.”

   To illustrate where we have been coming from as a nation, Carmichael pointed to several critical events that occurred during the past four decades. “Many of us remember October 1973, when the Arab oil embargo took place and created our fist energy crisis,” he said. “Long waiting lines at service stations formed and many stations turned off their lights on the Interstate. They were out of gas! Americans woke up and realized that we had built a mobility system on a finite fossil fuel. By 1974, I remember people abandoning their 4,000-pound, eight-cylinder, six-MPG Buicks and lining up to buy a VW Rabbit diesel. We started to ‘think small’ and solar and wind energies were being discussed. But by the late 1970s we were seemingly discovering oil under every polar bear in the Arctic. The price of a barrel of oil then went from $35 back down to $9-$12 a gallon, and by the middle 1980s we were once again well on our way to preferring gas-guzzling muscle cars, SUV’s, 400HP V8’s, and $70,000 trucks! Fat City was the way to go until last year. Furthermore, research shows the U.S. had an unwritten transportation policy that declared we wanted ‘cheap fossil fuel.’ Virtually any political figure who even talked about raising the gas tax was doomed to failure.”

   So, Carmichael posited, where are we today with our 21st century global economy? The truly big energy crisis has occurred. Oil rose to $140.00 plus per barrel. Gasoline/diesel went to $5.00 per gallon. Oil is down now to about $60.00 per barrel, as are gas-per-gallon prices; but our airlines are clobbered by high fuel prices; our Big Three car manufactures are shattered; and our economy is on some sort of life support. It is quite possible that gas, diesel, and jet fuel prices will go back up in the near future as long as we are held hostage by our dependence on foreign oil and unpredictable supplies, consumer demand, and fluctuating prices. Congress cannot keep prices reduced by legislation. Global economic chaos would result if just one major oil producing nation has some sort of calamity.

   “We can no longer afford the lavishness of the past. As soon as possible, this nation has got to radically change the way people and freight move in order to avoid long-term economic decline,” said Carmichael. “One need only look at our demographics and our growing population density. When I was 30, there were 130 million people in the U.S. By 2040, there will be 400 million. North America will have a population of well over a one-half billion people! We are finishing the first decade of this new century and the old order of ‘doing business as usual’ is not working. It will not be able to correct itself. Like China, we must think more wisely.”

   Carmichael looked at where we are headed with our transportation infrastructure. “What is the biggest public-works project this century that can ensure U.S. prosperity?” he asked. “Last century it was building Interstate I – 43,000 miles of grade-separated, four-lane highways. It served millions of cars and trucks and thousands of busy, small airports and commuter airplanes, feeding into huge hub airports with large passenger planes going long distances to big cities. The airlines in the 1970s and 1980s expanded, in part, with jet fuel prices at about 40-60 cents per gallon, with no tax. Western man built a huge transportation system on this cheap oil; it employed millions of people and we all prospered. But that is all over in 2009!”

   “So what do we do now?” asked Carmichael. “What major public-works project can we implement this century that  will help keep our 400 million people working, will produce a prosperous economy, and will build a long-lasting, sustainable transportation system? My answer is we build ‘Interstate 2.0′. I initially said it should be 20,000 miles of high-speed rail. It really should be 30,000 miles and use the huge, wide, existing – and paid for – rail Rights of Way in partnership with the private freight railroads and the states. We should give the private railroads their 25% investment tax credit to encourage them to upgrade and double- and triple-track their main lines to increase speeds and double freight capacity. States should build or lease high-speed track on their ROWs to run new, modern, intermodal freight and passenger trains. These high-speed tracks should be grade separated just as were the Interstate Highways. Our objective is to enable Amtrak and its partners to run frequent and safe 110-125 MPH passenger trains. We have the technology with GPS/PTC to do this with a high degree of safety. It will cut highway fatalities at least 50% and drastically reduce the wear and tear and cost of maintaining the highways.”

   “So intermodal and high-speed passenger rail visionaries have finally been heard by a young, new President who produced $14.3 billion to be spent on high-speed rail corridors in the next five years to begin Phase I of this century’s most important infrastructure program. This huge work program puts America on the way to creating an ‘ethical’ intermodal freight and passenger transportation network. We can electrify it by mid-century. It will then truly be an ‘ethical, sustainable’ system. President Obama will be the 21st century’s ‘Eisenhower’ because he will have created ‘Interstate 2.0,’ a high-speed rail network reconnecting our center cities, major airports, and ports – recapturing the vital role of the intercity bus and transit industries.”

   In explanation, Carmichael defined an ethical transportation system as one that 1) does not injure or kill 2) does not pollute and is environmentally benign 3) does not waste fuel and 4) does not cost too much. It uses the strengths of each mode.  “We must build a 21st century intermodal transportation system using the ’steel wheel and steel rail’ as the fundamental element of this system. Early in this century we can electrify all of North American rail, providing a new source of energy for our transportation system,” he said.

   “We have started,” summarized Carmichael. “This is Phase I – $14.3 billion of funding and 13 federally designated, high-speed rail corridors. Amtrak has crossed the Rubicon. It now needs to put out an RFP for 150 new trains sets. It will show the American people that a truly interconnected intermodal transportation system is coming. By using our existing freight rail ROWs and not destroying more green fields, we can actually have a much better transportation system than Europe. It is an exciting new era that we are entering.”

   About ITI

   The Intermodal Transportation Institute at the University of Denver offers an Executive Masters Program that awards a Master of Science in Intermodal Transportation Management from the University of Denver. This graduate degree program prepares transportation industry managers for the increasingly complex, global business environment where knowledge of finance, quantitative processes, supply chain, law, and public policy issues as well as freight, passenger, and intermodal transportation operational strategies are critical management tools for success.  For more information on the ITI Executive Masters Program call: 303-871-4702 or visit: www.du.edu/transportation.

   Two things Mr. Carmichael said are of profound importance. The first is naming an “ethical transportation system,” a phrase that is seldom used when referring to major industry. His definition is superb.

   The second is his call for Amtrak to immediately order 150 new trainsets. While that is just a round number, the meaning is all too important. Amtrak can either get with the new program in this country, or it can be left behind.

   As demonstrated in the last issue of This Week at Amtrak, it’s tough to imagine Amtrak having any type of current, relevant plan for expanding the all-too-important national long distance system instead of just raiding state treasuries for the operation of often statistically irrelevant short corridor routes. We need some sort of statement right now from Amtrak about a new equipment plan, even if it’s to say a plan is in the works with perhaps a broad, general outline.

   We hope GM one day will have the success of Conrail; is it impossible to hope that one day (hopefully, soon) Amtrak, too, will have the success of Conrail?

4. The following commentary appears in the Spring issue of the Minnesota Association of Railroad Passengers newsletter.
   

   By Andrew C. Selden

   Is Amtrak secretly planning to exit the long distance business?

   It may be. Despite billions of new federal grants this year, signs are building that Amtrak may be on its way to dropping the commercially strongest part of its business, or alternatively, perhaps, setting up another “hostage” situation, where Amtrak pulls its old stunt of threatening to shut down this service or that, or everything, if Congress doesn’t give it billions of new dollars (almost all of which are always lavished on the NEC).

   By any objective analysis of Amtrak’s actions, one is forced to conclude that Amtrak wants out of the LD train business. They are not repairing locomotives in Chicago, they are not fixing wreck damaged Superliners at Beech Grove, they have no plans to order more equipment for LD trains. Cliff Black, Amtrak’s P.R. chief, referring to the LD trains, said “The moment of truth is coming.” Before Alex Kummant was run out of town, he said, “The future is in the corridors.” The last Amtrak CEO who cared about the LD trains was Graham Claytor, who said at a NARP Board meeting in Washington that “the LD trains are operating in the black.”  Eyewitnesses sitting right in front of Claytor confirm that this is exactly what he said.

   Profit-making businesses have customers, and those customers are vital to the success of the business; not enough customers and the business dies. Businesses do everything they can to get more customers, and the value their most important customers by “courting” them constantly.  All this is blindingly obvious.

   So, who are Amtrak’s valued customers? Passengers? Not really, at least not directly. Amtrak’s most important customers are Congress and the States that hand Amtrak all that free cash to pay for service. Thanks to years of myth-making by Amtrak, Congress believes that the LD trains are huge money losers, that nobody rides them, and they go places nobody wants to visit. This is all nonsense, but it is what Congress (and the media) believe, so it might as well be fact.

   Since Congress is Amtrak’s most important “customer,” and since Congress believes that the LD trains are the cause of Amtrak’s financial mess, what is Amtrak to do? Admit that they have been cooking the books and lying to Congress for years? Admit that Warrington’s promise that Acela would make a PROFIT (and bring in enough cash to support the rest of the system) was a big fat lie? Admit that they have been making spending decisions to garner political support (which translates into free money), rather than to develop a better, bigger national railroad which carries more passengers, more miles? No way, no chance. Amtrak is a company that focuses its attention on doing things that get more of that free money – rather than getting it the old fashioned way, by earning it.

   It seems increasingly likely that Amtrak is going to let the LD trains die by simply not ever ordering more LD equipment, and/or not repairing anything at Beech Grove. As equipment wears out or is damaged, trains will come off, and because Congress believes the LD train myth, this action will be viewed by many as an example of Amtrak actually being fiscally responsible.

   Once the LD trains are gone, it will be interesting to see how Amtrak and the politicians along the NEC explain the continued need for that huge subsidy.

   Consider, too, that Amtrak’s new interim CEO, New Yorker Joe Boardman, has been mouthing support for the (skeletal) national network as it exists now, but doing almost nothing to invest in it. Certainly, no new cars are being ordered, and no new route connections implemented (although, plans are well along to run a daily train Chicago – Dallas – San Antonio – Los Angeles over the Texas Eagle/Sunset route). In the six months or so that Mr. Boardman has led Amtrak, there has been much talk about another wave of improvements, including new Viewliner and Acela cars, for east coast services, including the NEC, of course, but nothing at all about new Superliners or western routes.”

   A business that doesn’t believe in itself, that doesn’t reinvest in itself, that is consumed with political game-playing rather than a relentless entrepreneurial drive to play to win in the marketplace, is a business that really is in a slow liquidation. This isn’t about “fairness,” or “regional balance,” or “social service to fly-over states.” It’s about smart business and winning strategies. And based on all the evidence, Amtrak is failing at that.

5. Here in Florida, a game of “Chicken” is being played by the State of Florida and Tri-Rail in Southeast Florida.

   Readers of this space know the just completed legislative session in Florida earlier this month was not kind to commuter rail; completely killing (they think) SunRail in Central Florida, and leaving Tri-Rail in Southeast Florida somewhat hobbled without a permanent funding source.

   Part of the failed SunRail deal was for Tri-Rail to receive permission for the three counties it serves – Palm Beach, Broward (Ft. Lauderdale), and Miami-Dade – to levy a $2 per day surcharge tax on rental cars in those three counties, only. It was estimated this surcharge would provide adequate funding, in addition to farebox revenues and some monies kicked in from the three counties, for Tri-Rail to be a fully functioning system.

   Whoops! SunRail went down in flames (for the moment), and the Tri-Rail’s permanent funding along with it.

   Now, Tri-Rail says its host counties are not going to fund it fully, and it will have to cut back on service, slashing its daily service and completely eliminating all weekend and holiday service.

   Whoops! again. The feds, who provided a lot of the funding for the recent upgrades to Tri-Rail infrastructure, say they have a written agreement with Tri-Rail which states Tri-Rail will at least run all of the trains it does today (less two frequencies), or Tri-Rail will have to pay hundreds of millions back to the feds because the federal money was intended to help Tri-Rail provide a full schedule of trains.

   But, wails Tri-Rail, it has no money, and it’s going to receive even less money next year from the three counties it serves. So, supplication to the State of Florida has occurred, but the state says it has no money, either, in this tight budget year. (When it comes to government, somehow isn’t EVERY year a tight budget year?)

   Which leaves Tri-Rail in a pickle.

   What about raising fares? That is going on right now, with a 25% increase, but it won’t be enough.

   More riders? Already happening, courtesy of last year’s high gas prices, and the riders decided to stay, even with today’s lower gas prices.

   Tri-Rail is a relatively new system, just 20 years old. It has never had an opportunity to create any type of financial cushion, and has always been dependent on the financial kindness of others to survive. It kept fares artificially low for decades, declaring it was all riders could afford to pay. No one even took inflation into account; just unrealistically low fares hoping today’s day of reckoning would never occur.

   Tri-Rail is not alone. News accounts from across the country tell sob story after sob story about insolvent transit systems. What started as sleek steel wheels on shiny steel rails have become lumpy, worn wheels on two streaks of parallel rust.

   Who is to blame? Everyone. Commuter rail managements who thought they were in the welfare business instead of the transportation business made unsustainable business plans that never tested to find the high end of commuter fares.

   Local governments which saw the benefits of commuter rail systems, but couldn’t bring themselves to understand the fiscal needs of commuter rail as much as the fiscal needs of concrete and highways.

   State governments which for the most part have ignored commuter rail, never bothering to look at its benefits or flaws, especially the benefits of higher tax bases and greater job creators.

   And, the federal government, which has never really had a defined surface transportation policy which blended all types of surface transportation into a cohesive system.

   The one group NOT to blame is the public. When given the chance, the public has embraced commuter and light rail time and time again when it was built intelligently and to meet public demand. Skyrocketing ridership in places like Dallas-Fort Worth, Phoenix, Minneapolis, various places in California, and elsewhere prove the point.

   When the public is presented with intelligent commuter rail, the public will sample it, and a certain portion of the public will choose commuter rail for a variety of personal reasons.

   So much public policy today is made for annoying “green” reasons, or reasons various nanny state government busybodies think we should do for our own good (After all, we know best, they say, no matter what.), often public planners forget that if a good plan is put into place, the public will willingly flock to it, without having to inflict pangs of environmental guilt. Good commuter rail systems – especially ones like found in the Dallas-Fort Worth system – are able to stand on their own as attractive alternatives without overt government coercion.

   Where should these commuter rail systems be going? Straight into the future, but with better planning, better financing, and better management.

   At the moment there seems to be two types of politicians controlling the fate of commuter rail. Here in Florida, we have the type which are uninformed, and ideologically opposed to any new taxes on anyone for any reason. These same folks, while having an admirable goal, seem to think somehow infrastructure and public utilities spring from the ground after a good soaking rain. It never occurs to them the prudent investment in commuter rail brings huge results from higher tax revenues because commuter rail helps make cities livable, desirable for new businesses to relocate to the area, and commuter rail is an economic generator in its own right.

   The other type of politician looking at commuter rail seems to think money grows on trees or is easily produced by printing presses, any type of commuter rail is good (No matter how ill-conceived.) because it creates jobs (Even though they are not quite sure how jobs are created.) to build, and then voters can ride for nearly free because Big Brother will be happy to foot the bill for perpetual commuter rail by raising taxes on all of those mean, evil rich people.

   Neither type of politician is very good for commuter rail.

   All types of politicians need to be educated about commuter rail and learn the discrete benefits of commuter rail as applied to any local system.

   Why do we care about commuter rail? Because it is an infrastructure incubator for Amtrak and intercity passenger rail.

6. As long as everyone understands the huge worlds of difference between commuter rail and intercity passenger rail (And, the individual management philosophies which apply to each distinct, separate type of rail.) then an understanding can be reached how one is good for the other.

   Commuter and regional rail done correctly provides a superb feeder system for Amtrak’s (or, anyone else’s) long distance trains. Commuter and regional rail stations and infrastructure also serve nicely as stations and infrastructure for long distance trains, without long distance trains being burdened solely with all of the costs of those stations and infrastructure.

   Long distance trains, when part of a robust system (a far cry from today’s skeletal Amtrak system), reverse feed commuter and regional trains, disgorging passengers from long distance trains to complete their journey by local rail.

   One hand washes the other, neatly and cleanly.

   What we now need is a comprehensive government surface transportation policy which understands the interconnectivity of all of these systems, and the strengths and weaknesses of each.

   Some will say we used to have that, in the heyday of railroads. But, really, we didn’t. Because, while we had a fully mature passenger railroad system, it was a highly regulated system constantly fighting with government interference and resulting high costs to operate often unnecessary trains and services. Also, at the time, there was no mature highway system, but, rather, a skeletal system of two lane roads around the nation which ironically resembled today’s Amtrak national system.

   And, too, there wasn’t a mature air travel system, but, rather, a system of DC-3 Gooney Birds and later ill-starred Constellations with plenty of holes in the route system, and no effective transcontinental service as we know it today.

   The bottom line is, we never have had as a nation a real passenger transportation policy which addresses surface, air, and water transportation. We have either had predominantly water transportation (Erie Canal), predominantly passenger rail transportation, or predominantly highway and air transportation. Never have we had a policy which takes into account the full benefits of all of these modes of transportation.

   The wise gray heads like Gil Carmichael are making a clarion call for a workable transportation policy. Amtrak can be an important part of that policy, but only after it has had a major restructuring from what it is today.

7. The Wall Street Journal last week reported United Airlines has requested dueling bids from Boeing and Airbus for 150 new aircraft – all paid for with private capital, and all for passenger service. Someone obviously thinks the passenger business is on the upswing.